Extended Family Spotlight – Daniel Lloyd

On September 12, our office manager, Linda Lloyd, watched her son, Daniel, a Lifeguard for the City of Santa Cruz, receive a Fire Chief’s Commendation from the Santa Cruz Fire Department for his quick response that saved a life last summer.  In August 2016 at Capitola Beach, Daniel spotted a swimmer floating face down, and acted quickly.  After getting the victim out of the water and finding he was not breathing and had no pulse, Daniel secured the victim’s airway and initiated rescue breathing and CPR.  Arriving paramedics discovered that the victim’s pulse had returned, and he survived.  The victim had hit his head on the sand, fracturing his 7th cervical vertebrae, losing control of his limbs and he had lost consciousness in the water.  Daniel’s quick actions that day helped save this man’s life, and he is expected to make a full recovery.  We were all proud to hear this story at Wheeler, and Linda could not be more proud of her son, who is completing a Bachelor of Science in Electrical Engineering next year.  She says he’s an amazing young man, and we all agree!

 

Scam Alerts: Hurricane Charities and Ransomware

While The IRS, state tax agencies and numerous people in the tax and accounting industry are working together to warn tax professionals and their clients about phishing scams, they are still all too common. Here’s what you need to know about the two most recent scams: fake charities that take advantage of people’s generosity during times of natural disasters and IRS/FBI-themed ransomware.

Fake Charity Scams Relating to Hurricane Harvey

With Houston still reeling from the devastating effects of Hurricane Harvey, many people are wondering how they can help. One of the best ways to do this is by donating to a charity that helps victims affected by natural disasters. Unfortunately, however, due to the prevalence of tax scams, taxpayers need to make sure the organization they donate to is not a fake charity set up by unscrupulous criminals looking to make a fast buck or get people’s personal information.Continue reading

Avoiding Penalties on Early Withdrawals from IRAs

More than half of Millennials and Gen Xers have already or are planning to, withdraw money from their retirement plans to cover unexpected expenses such as medical bills, educational expenses, or buying a house, according to a recent PwC Employee Financial Wellness Survey (April 2017). Most notably, the survey also found that this trend is on the rise for both Millennials and Gen Xers, increasing 14 and 6 percent, respectively, from 2016 to 2017.

Background

When retirement plans such as the 401(k) were introduced, company pensions were still the norm and this “new” retirement savings vehicle was meant to be a supplement to the pension. Fast forward to today, however, and the retirement landscape has changed dramatically. Very few companies offer pensions anymore and most people rely entirely on whatever savings they’ve accumulated in their retirement account, along with social security) to get them through their golden years. In fact, for many people, retirement accounts are their most significant source of savings.

Because retirement plans such as the 401(k), tax-sheltered annuity plans under section 403(b) for employees of public schools or tax-exempt organizations, and Individual Retirement Accounts (IRAs) were created to help you save money for your retirement years, withdrawals before retirement age (59 1/2) are discouraged. As such, the IRS imposes a penalty of 10 percent for early withdrawals taken from qualified retirement plans before age 59 1/2.Continue reading

SIMPLE IRA Plans for Small Business

Of all the retirement plans available to small business owners, the SIMPLE IRA plan (Savings Incentive Match PLan for Employees) is the easiest to set up and the least expensive to manage. The catch is that you’ll need to set it up by October 1st. Here’s what you need to know.

What is a SIMPLE IRA Plan?

SIMPLE IRA Plans are intended to encourage small business employers to offer retirement coverage to their employees. Self-employed business owners are able to contribute both as employee and employer, with both contributions made from self-employment earnings. In addition, if living expenses are covered by your day job (or your spouse’s job), you would be free to put all of your sideline earnings, up to the ceiling, into SIMPLE IRA plan retirement investments.Continue reading

Seven Facts about Dependents and Exemptions

Some tax rules affect everyone who files a federal income tax return. With that in mind, here are seven facts about dependents and exemptions that taxpayers should know about.

1. Exemptions lower your income. There are two types of exemptions: personal exemptions and exemptions for dependents. You can usually deduct $4,050 for each exemption you claim on your tax return.

2. Personal exemptions. You can usually claim an exemption for yourself. If you’re married and file a joint return you can also claim one for your spouse. If you file a separate return, you can claim an exemption for your spouse only if your spouse had no gross income, is not filing a return, and was not the dependent of another taxpayer.

3. Exemptions for dependents. You can usually claim an exemption for each of your dependents. A dependent is either your child or a relative that meets certain tests. You can’t claim your spouse as a dependent. In addition, you must list the Social Security number of each dependent you claim. If you don’t have a social security number, special rules apply. Don’t hesitate to call if this is your situation.

4. Some people don’t qualify. You generally may not claim married persons as dependents if they file a joint return with their spouse. Again, there are some exceptions to this rule, so please call if you have any questions about this.

5. Dependents may have to file. People that you can claim as your dependent may have to file their own federal tax return. This depends on many things, including the amount of their income, their marital status and if they owe certain taxes.

6. No exemption on dependent’s return. If you can claim a person as a dependent, that person can’t claim a personal exemption on his or her own tax return. This is true even if you don’t actually claim that person as a dependent on your tax return. The rule applies because you have the right to claim that person.

7. Exemption phase-out. The $4,050 per exemption is subject to income limits. This rule may reduce or eliminate the amount depending on your income. Please call if you need additional information about the exemption phase-out.

Questions about dependents and exemptions? Call our office today at 408-252-1800.

A Name Change Could Affect your Taxes

Did you know that a name change could impact your taxes? Here’s what you need to know:

1. Report Name Changes. Did you get married and are now using your new spouse’s last name or hyphenate your last name? Did you divorce and go back to using your former last name? In either case, you should notify the SSA of your name change. That way, your new name on your IRS records will match up with your SSA records. A mismatch could unexpectedly increase a tax bill or reduce the size of any refund.

2. Make Dependent’s Name Change. Notify the SSA if your dependent had a name change. For example, this could apply if you adopted a child and the child’s last name changed. If you adopted a child who does not have a Social Security number, you may use an Adoption Taxpayer Identification Number on your tax return. An ATIN is a temporary number. You can apply for an ATIN by filing Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions, with the IRS.

3. Get a New Card. File Form SS-5, Application for a Social Security Card, to notify SSA of your name change. You can get the form onSSA.gov or call 800-772-1213 to order it. Your new card will show your new name with the same SSN you had before.

4. Report Changes in Circumstances when they happen. If you enrolled in health insurance coverage through the Health Insurance Marketplace you may receive the benefit of advance payments of the premium tax credit. These are paid directly to your insurance company to lower your monthly premium. Report changes in circumstances, such as a name change, a new address and a change in your income or family size to your Marketplace when they happen throughout the year. Reporting the changes will help you avoid getting too much or too little advance payment of the premium tax credit.

Please contact our office at 408-252-1800 if you have any questions related to IRS requirements regarding a name change.

Equifax Security Breach

As you may be aware, Equifax yesterday revealed that they had a massive data breach of 143 Million American’s information.  This is roughly ~80 percent of all credit card users who are affected. https://www.cnet.com/news/equifax-data-leak-hits-nearly-half-of-the-us-population/

We wanted to pass along some links for everyone to verify if they were affected and how to respond:

Things you can do immediately, for everyone, right now:

  • Check here to see if you’re impacted. If you are included in the list of potential victims, you can choose to file a CFPB complaint against Equifax.
  • Place an initial 90 day fraud alert on your file. This is free and will require lenders to contact you if someone (including yourself) tries to apply for credit. Government info. You only have to do this with one bureau in order for the alert to be placed on all three, and it should take less than 5 minutes:
  • Check your file at annualcreditreport.com and verify its accuracy; dispute incorrect information. This is a government-mandated website, signed into law (FACTA) in 2003 by George W. Bush, which allows you to pull each report once every 12 months. Dot-gov site here.

Help keep your information safe.